Good morning. My name is Isaac and I will be your conference operator today. At this time, I would like to welcome you to the Celsion first quarter 2017 earnings conference call. [Operator Instructions] At this time, I would like to turn the call over to Mr. Jeffrey Church, Celsion's Senior Vice President and Chief Financial Officer. Please proceed, Mr. Church.

Thank you. Good morning everyone and thank you for joining us today to discuss our first quarter 2017 financial results, which we announced this morning before the market opened. Today's call will be archived and a replay will be available beginning tomorrow and will remain available by phone until May 26, as well as available on Celsion's Web site for 90 days. Before we begin the call, we wish to inform participants that forward-looking statements are made pursuant to the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. You are cautioned that such forward-looking statements involve risks and uncertainties including without limitation, the risk of clinical failures, delays or increased costs, unforeseen changes in the cost of our research and development activity, possible acquisition of other technologies, assets or businesses and possible adverse action by customers, suppliers, competitors, regulatory authorities and other risks detailed from time to time in the company's periodic reports filed with the Securities and Exchange Commission. At the conclusion of today's formal remarks, we will open the call for questions. I would now like to turn the call over to Mr. Michael Tardugno, Celsion's Chairman, President and CEO. Mike?

Thank you, Jeff. Good morning, everyone and thank you for taking the time to join us. With me today on today's call is Dr. Nicholas Borys, Celsion's Chief Medical Officer, and Jeffrey Church, our Chief Financial Officer, from whom you just heard. As always, we are delighted to have the opportunity to update you on our progress and importantly, to answer your question. Seeing that our last conference call was less than six weeks ago and that we are just a few days away from our annual shareholder meeting, today's prepared remarks will be relatively brief and maybe a bit repetitive, but I hope that you will agree with me that some things, particularly good things like you will hear today are worth repeating. Before getting started, however, I want to remind you that we have a number of important proposals to be acted upon during the annual shareholder meeting on this coming Tuesday, May 16. The affirmative vote on each of these issues is recommended by your board of directors as they set the stage for the most important of future developments from your company. By this time next year we will be approaching full enrollment of our Phase III OPTIMA Study in primary liver cancer, also known as HCC or hepatocellular carcinoma. We are now likely 18 to 20 months from the first preplanned interim analysis of overall survival. Assuming positive data, this event will no doubt be transformative. In support of these objectives, a proxy was mailed to you -- the proxy that was mailed to you includes two very important enabling proposals for shareholders to consider. First is a proposal to authorize the board to effect a reverse split, ensuring that the company remains in compliance with NASDAQ listing requirements. The liquidity of our shares and…

Thank you, Mike. During the first quarter of 2017, we continued to efficiently utilize our cash as we effectively our clinical development activities. We remain confident in our ability to continue to manage our personnel and overhead cost while we focus on advancing our two lead products through clinical testing. We ended the first quarter with $4.5 million in total cash. During the first quarter we announced a secondary public offering with both institutional and retail investors, whereby we raised gross proceeds of $5 million, to fund operations in mid-2017. Celsion's 2017 first quarter financials were included in the press release which was issued before the market opened this morning. Our first 10-Q was also filed at the same time. We continue to monitor our cash expenditures to ensure the most efficient use of cash to create shareholder value. Our clinical focus, as Mike reviewed, is squarely on the enrollment of our pivotal Phase III trials of ThermoDox in primary liver cancer and the early stage studies for GEN-1 in ovarian cancer. In order to fully execute the patient enrollment of the OPTIMA study, we will need strength in our balance sheet by accessing the capital markets, smart utilization of our ATM facility and through potential strategic investments and collaboration. While we are hopeful of raising more capitals on terms more favorable to the company and shareholders, the current markets, capital markets, continue to be quite challenging. We are always mindful of dilution to our shareholders and are carefully exploring various financing alternatives. Cash used for operations in the first quarter ended March 31, 2017 was $3.1 million compared to $4.7 million in the prior year. This decrease was the result of our cost reduction efforts implemented during 2016, a tighter product development focus as we talked about earlier, and…

Well, thanks, Jeff. Great job. So now that’s the conclusion of our prepared remarks, I would like to ask the operator to open the lines for your questions. I will ask as always that you limit the number of questions no more than two which will provide everyone with an opportunity to participate in the Q&A session. So, operator?

[Operator Instructions] And we will take our first question from Joe Pantginis with Rodman & Renshaw. Please go ahead.

Couple of questions, if you don’t mind. First, Mike, you just recently announced the increased enrollment for the OPTIMA study in China and Vietnam. Can you discuss the importance of this increased enrollment and also the potential for -- I am sorry, the timelines for interim timing of the OPTIMA study. Thanks.

Okay. So the importance of enrollment in China. I think, Joe, you are hitting the two very -- I mean it's two very important markets for us. China has over 50% of the world's incidence of HCC. That’s a 425,000 patients. If we are right, I mean if ThermoDox shows a positive outcome in the OPTIMA study, we have every reason to believe that it will. The addressable market in that population represents above 30% of those newly diagnosed. It's a big number. It's a number that overwhelms the medical community in China. Nick and I visit these hospitals. It's incredible. The number of patients that are waiting to be treated, waiting rooms are -- it's just hard to explain. Enrollment in this country was for reasons of administrative reorganization at CFDA was held up with country approval. Not for just us, I mean everybody was applying for clinical trial. We lost almost a year in China. Regardless, we have made it up with activity in other countries. But the important thing is, for us to enroll 200 patients in China. That’s the minimum required to submit an NDA as we currently understand it. There is some room there, I think, but for the most part the regulatory authorities have been fixing at 200 patients. So since initiating the study, which we are currently now in 14 sites, soon to be more. We continue to explore. The enrollment rate has -- it actually surprised us. In a very short period of time, we were well over 50 patients in China. And I suspected the current rate by the time we reach 550, which is the target for enrollment in a study, again which could be about 14 or so months from now. We should be very close to 200 patients…

No, thanks, Michael. The additional details. If I could just switch quickly to the GEN-1 program. Can you discuss both the importance of the local IL-12 delivery versus systemic implication as well as the comments you made on the call versus the importance of the, I guess, you could call it the observe T regulatory decreases versus the base line in the OVATION study. And I would appreciate that. Thanks a lot.

Yes. I am going to ask Dr. Borys to chime in on this but I just want to say this, IL-12 was recognized as a [indiscernible] anti-cancer agent back in the 80s. Dr. Rosenberg Laboratory in the NIH. The problem with IL-12 has been its pharmacokinetics. It's half life [is very short. So the protein itself administered as a therapy with a very short half life doesn’t have a therapeutic effect. It order for it to be effective, it has to be delivered in very high doses. The problem for systemic dosing of IL-12 in high doses as I understand it, is that it has some very very serious side effects, including the potential for death. The cytokine response syndrome. So local production is important. It eliminates the potential for the cytokine storm and maybe you want to comment a little bit more on that, Nick.

That’s exactly the reason why we try to take advantage of our technology for local administration into the perineum for GEN-1, where we watch carefully to see if there is any systemic exposure through our blooded serum samples and if we see minimal to non-existent exposure in that area. Meanwhile, to the targeted area in the perinephric fluid, in the tumors we are seeing activity. And all I can say is, keep an eye out for our posters at ASCO, we will be reporting on the details of that. And I think, again, as Mike mentioned, our technology is able to focus the IL-12 to the targeted area where we can get very nice increased concentration. And I think the data once we publish it will be very interesting to you.

The Treg cells, so a little bit over my head here. But I think just generally, we all know that the Treg cells in their various forms, I think there is FOXP3 and others. Various forms have the effect of inhibiting the immune systems effect on malignant cells. What we have seen in this is, not unexpectedly, it's been in the literature in early development of IL-12, is a suppression of the density of Treg cells in the immunohistochemistry samples that -- tissue samples there were taken during surgery. We compare that decrease in Treg cells to the increase in T cells. And we see a positive ratio among this population of patients that’s been treated. We believe that positive ratio and activation of the immune system via T cells with regulation or of the [indiscernible] that are put on the immune system, we see that as a positive event. Positive data set.

And we will take our next question from Jason McCarthy with Maxim Group. Please go ahead.

And maybe I missed it as part of Joe's question. Where is the total percent enrollment in the OPTIMA study now? And my second question is related to GEN-1. What are the plans going forward for the next trial and in the OVATION study, there a couple of patients that did have R1 resections and there were some residual tumor there. Are those patients going to be tracked for progression? Will you give us an update on all of those patients and how there clinical outcomes are going forward. Thanks.

Okay. So let take the second quarter first. Do you want to comment on that Nick? Did you get that?

Okay. So in our OVATION study it's part of the protocol that we are going to be following all the patients for progression free survival. So we have regular calls with the sites that review the patient status and see how they are doing. And so we will be reporting that through the months ahead of us. So that’s, I mean particularly in all the patients, so whether they had R0, R1 or R2 disease.

So just to continue around the GEN-1 and your question, Jason. So I am probably going to get some evil eyes here, but given the, what appears to be some very impressive translational data. It seems to me, we have always talked about the next step in the development of GEN-1 going to a recurrent population. Platinum resistant or platinum refractory patients. Combing GEN-1 with newly approved Avastin and of course Doxil. But the clinical data along with some of this, what appears to be very impressive translational data, suggests to me, I am trying to make my case to our Chief Medical Officer and doctors here, -- or medical advisors, that continuing to treat patients with GEN-1 post-surgery maybe a very interesting way to stimulate the immune system in patients who have the potential for recurrence. So that’s a subject I think that we would like to explore with our medical advisors. We know what we know about this newly diagnosed patient population, is that their immune system has not been severely compromised with prior chemotherapy. Using GEN-1 in a newly diagnosed population seems to be the, or has the potential to be most effective while the immune system is still relatively intact. That fact that we have patients now where we removed substantially all of the malignancy. In some cases with no visible or microscopic or tumor tissue left, seems to be that continuing to recruit the immune system maybe an important strategy for preventing recurrence or delaying recurrence of the cancer. So that’s a subject that we want to discuss but in the mean time our formal answer is the step is a Phase I/II study, combining GEN-1 with Avastin and Doxil in a recurrent population. Now to your first question, where do we stand. We are not giving exact numbers. I would be more than happy to but we did so at our prior studies. Having people constantly nagging us for numbers and trying to reverse engineer what the PFS rates were, is just not productive for investors and certainly not for the company. But I will say to you, we are well past the 50% mark in anticipation of completing enrollment over the next few months.

And we will take our next question from Keith Markey with Griffin Securities. Please go ahead.

I was just wondering if you might be able to talk a little bit about the HEAT study subgroup. Obviously, you are getting, you are continuing to follow or you did continue to follow them for a long time. Is it fair to begin to talk about potential curative use of ThermoDox for that group of patients that you have been targeting and that were specifically in that subgroup.

You know the subject of ThermoDox being curative in this population was not -- it didn’t first come from the company. We heard more than one opinion leader when they were reviewing the data with their peers in medical conferences and a couple of symposiums that we sponsored, and most recently at the RSNA, by the way. Where we had, following the NIH's presentation, we had one [indiscernible] one of the pioneers in our RFAs, stand up amongst this group of interventionists and others, say we think we may have a curative alternative to surgery. So it's always going to depend on the strength of the data Keith. But in this population that we did follow for over three years. Now the study has ended. It has to end at some point. So in the patients that we follow for three years, the ThermoDox arm which represented about 50% of the 280 or so patients, about 140 patients, never reached the median and we were at 80 months. I think the medical community considers 60 months survival to be cure. So I don’t believe we continue to follow these patients, do we Nick?

Yes. We are not following them.

So the manuscript for the study is written and we had a few questions coming from reviewers. I suspect we will be resubmitting it here if we haven't already. And we will be looking forward to the publication.

Very good. Thank you. And then given the very successful -- the success you achieved with that subgroup population, it would seem to be that assuming that that stands up in the OPTIMA study, you are going to have a fairly decent flexibility in pricing ThermoDox for its use with RFA. I am sure you have begun to think about it. I know it is a bit premature. But in the area of what appears to be value based medicine that’s emerging here in the United States and has been used in different parts of the world already. I would think that, ThermoDox would offer a very competitive approach to a variety of cancers including hepatocellular carcinoma and bladder cancer possibly. Have you given much thought to how it would be used and pricing it in various markets around the world?

I would tell you the short answer to the question is, yes. I will give you some color although we have a lot more market research and pricing research to do the majority of the research that we commissioned, really focused on progression free survival as the primary endpoint. And what we know from that research is that PFS, as much as I think we were looking for, you know a six month or four month improvement. Even a four month improvement in PFS was very valuable in the -- and similarly at somewhat of the discount for the European market. Probably that is valuable in the Asian markets. We have done some follow up on the top line as to continue to give us some guidance, it's important for us to know the value of the assets, particularly in conversations with a potential licensee. So we have done a little bit more work given an overall survival endpoint. And you know, I mean this is really -- it's pretty amazing -- if uninhibited with government controls outside the United States, the value of extending a person's life with a single dose of ThermoDox for over 80 months is almost incalculable. It’s a big number. That being said, we are mindful of the limitations that we could be faced with in pricing ThermoDox, particularly outside the United States and particularly in economies where the standard of living is modest or third world. One of the reasons why we developed this manufacturing capability with Hisun China, was to give us a cost of goods that would allow us to have very good margins in countries, Malaysia, Philippines, China. So very good margins. And I would say, probably close to 90 margins in those countries. So I didn’t give you a number on pricing but we are very carefully considering both from the local economics, from the regulatory aspect. In the United States we will be mindful of the incidence rate and the demand that ThermoDox, the pressure that ThermoDox will put on the healthcare system. I think, all in all you can carefully think of -- you can clearly think about ThermoDox as a billion drug, globally. A billion dollar plus drug globally if we do hit our endpoint.

Yes. That’s great. Thank you. I look forward to that as I am sure a lot of the investors out there. I was also just going to follow up and ask you whether or not you have had any discussions regarding reimbursement from any of the -- in any of the third world countries or developing nations, and as well as the United States?

Well, we have not. Just to be very Frank, we have not. We believe it's premature. I think before we set expectations, we really should know the strength of the data. Now for the most part, pricing is a function of the strength of the data. If we set the pricing expectations too soon and find ourselves with a more valuable outcome, we maybe at a disadvantage.

And we will take our next question from Joe Pantginis with Rodman & Renshaw. Please go ahead.

I want to follow up on the GEN-1 opportunity with regard to -- you know a lot of these patients are experiencing prior chemotherapy versus the potential for immune system benefit. And I am really focusing on the potential for things like [epitop] [ph] spread and factors that would be able to impact the immune system. And I would appreciate your insight on this. Thanks a lot.

Nick, do you want to take that?

Yes. I am not so familiar with what you are driving at in terms of the [epitop] [ph] spread but our data does cover, going from newly diagnosed which is these patients that we are looking at right now to patients that have been platinum failures. So we have a full range of data and looking at the immunological spectrum on this is going to be a big focus for us this year, particularly now that we have this translational data where we could look at the different markers and we could look at the impact on the regulatory cells. So we are also mindful of the recent success with PD1s and we see a potential partnership with that. Mike also discussed before the potential application in terms of the VEGF inhibitors as in the Avastin work. So our preclinical data strongly supports that scenario. I think there is lots of possibilities once we understand this translation data and once this PFS data comes through.

And it appears there are no further questions at this time. I would like to turn the conference back over for any additional or closing remarks.

Thank you, operator and thank all of you on the phone for joining us this morning. We certainly do appreciate your interest and your support. I can't tell you how much that helps to inspire this team. We remain excited as I hope you take from our comments, about the potential for ThermoDox and this very novel and could be very important immunotherapy GEN-1. We are focused on these programs like laser beam. I hope it's clear that these two product candidates are demonstrating significant potential as we approach completion of what could be one of the biggest transformational events in biotech, completion of our Phase III study perhaps as late as the end of next year. So we are excited with our progress and look forward to providing you with updates as always. As we have information available to us and we think it's important, we will get it out to you via press releases and certainly on these calls. As always, your support, as I said in your answers, is appreciated and meaningful. My last comment is the comment that I opened up with. Please vote. If you haven't received your proxy, we are available to you literally 24 hours. Your vote is important to us. It matters. Your board of directors as you are considering voting if you haven't, recommends that you consider an affirmative vote on all of our proposals. So, again, thank you for joining us on today's call and we look forward to speaking with you at the shareholder meeting on Tuesday if you are there.

And this concludes today's call. Thank you for your participation. You may now disconnect.